Monthly Archives: August 2012

The dozens of shootings that have taken place in last few years, and the number of shootings that take place ever-so-often, begs the question “Do we need a gun rights?”. The latest shootings that took place in a place of worship, a Gurudwara in Wisconsin, and before that in a movie hall in Colorado, is a tragedy of huge proportions. But the failure to act, on the part of the Govt, speaks of a deeper sickness at the willingness to neglect and sideline it in the name of preserving gun rights.

How does a 24 year old PhD student legally buy an assault rifle, a 12 gauge shot gun and two pistols? What justification is there for a young man with no military or police academy training to access weapons whose only purpose is to fight in war? And inspite of such incidents, no one is willing to talk about gun control.

This movie, ‘Runaway Jury’ based on John Grisham’s work, addresses the issue of the gun lobbyists and how easy availability of firearms is making life altering changes to the society. A depressed and psychologically traumatized person with a gun in his hand can take away so many innocent lives. And along with those lives goes the peace and happiness of the families of the victims. How can the victims’ families ever be compensated?

The movie talks of one such shoot-out, but more importantly it was about how a jury can be manipulated to get the desired verdict, for or against. The movie begins with a failed stock trader of a brokerage firm who shows up at his workplace and suddenly opens fire at his colleagues. The shooting leaves quite a few people dead and others injured. Celeste, the widow of Jacob Wood who died in the shooting, is one such victim; and she takes the Dicksburg Firearms to court on charges of gross negligence. Her attorney Wendell, played by Dustin Hoffman, is fighting for gun control while the defence attorney Durwood is being helped by jury consultant Fitch, played by Gene Hackman. Fitch tries his best to subvert the process so the jury can give a verdict in favor of Dicksburg.

Among the jury memebers is Nicholas[John Cusack], a man who works at an electronics store. His girlfriend Marlee [Rachel Weisz] manipulates things outside the court-room, while Nicholas plays his cards inside the court-room as part of the jury. They both collude to fight Fitch and bring him to his knees while Wendell guides them as the defence lawyer. Both Nicholas & Marlee have a hidden agenda in rigging the jury verdict and that is revealed towards the end of the movie. The wonderful thing is that, even after the movie gets over after a whole lot of action and thrill, the message is not lost; it stays with you.

All the actors did well in the movie, but Gene Hackman as the desperate jury consultant who wanted the jury to be on his side, stood out. His aggression and the recklessness of going to any length, even if it meant wiring 15 million dollars, totally justified the character sketch that Grisham had crafted out. Dustin Hoffman played the helpless lawyer pretty well. Cusack and Weisz went about their work nicely, but nothing extraordinary.

But I must say one thing here, the book was so different from the movie. Actually its the other way round, the movie was so different from the book. While the book ‘Runaway Jury’ concentrated on anti-tobacco brigade, the movie was against the gun culture. The change of theme was probably keeping in mind the prevelant gun rights issue, and it added more drama to the movie.

The number of homicide cases are staggering, and 52% of the suicides in US are executed using a gun. If a student is depressed, he takes his parents’ gun to school and starts firing randomly, if a teenager has been bullied then he picks up a gun to silence the aggressors, sometimes a kid just misfires while toying around with a gun. Gun is the cause of many major incidents and minor accidents.

Its amazing how so many of Grisham’s novels were actually about fighting the system, the corporates and plugging the loopholes in the legal system which were being exploited and how it went against the welfare of the common man.

His indictment of the system and the veiled attack on the flaws of the criminal justice and litigation process was very well highlighted in his works. Grisham continues to write, but off-late his works haven’t made it onscreen. Nevertheless, they are wonderful to read.

I am sure you have observed how most fund houses have a tendency to bring out similar sounding products and MFs with similar themes due to intense competition. So, if one AMC announces Top-200 or Top-100 Fund, then all other AMCs will sooner rather than later, come out with a similar scheme. And this trend is repeated across all funds of all sectors & all market caps.

In the same vein, off-late we have had 2-3 MF’s with US centric funds. The first AMC to start the trend was Franklin Templeton. FT India Feeder Franklin US Opportunities fund was launched in Jan’12 with a view to provide capital appreciation by investing in units of Franklin US Opportunities. So, its basically a Fund-of-Funds which taps into US-based equity and equity based securities.

The current NAV of this fund is Rs.10.72 and its 6-monthly high has been Rs.11.4. This means, currently it is giving a return of 7.2%. But how sustainable is that, in this fluctuating market? When the fund was launched, the timing was such that global markets were doing pretty well for that brief period till Apr’12, and that’s when the 6-monthly high was achieved. But as the markets settled lower, the NAV too fell to Rs.10.5.

In the Manager’s report dated 31-May-12, the overview says that “US equity prices fell in May as US investors were focused primarily on the intensifying European sovereign debt/banking crisis, lower growth in China and various U.S. indicators that have recently worsened”.

Historical Performance31 May 2012

1 Mth

3 Mths

6 Mths

YTD

1 Yr

3 Yrs

5 Yrs

10 Yrs

Since Incept

(03.04.00)

Franklin U.S. Opportunities Fund A(acc) USD—NAV

-9.18

-7.48

0.54

3.34

-6.55

50.51

9.76

73.77

-25.80

Russell 3000 Growth Index USD

-6.47

-3.75

6.55

6.88

0.56

59.85

9.95

60.04

-17.02

Whatever be the reason for poor performance, the truth is that in this globalised world, all markets are inter-related. So, the cause-effect ripples are felt everywhere.

The world has not decoupled and equities across the globe still move in tandem although the degrees vary.

Anyhow, a few weeks ago ICICI Prudential US Bluechip Equity Fund was launched with NAV of Rs.10 and as of today its trading at Rs.10.2. Again the objectives are the same, except for the fact that ICICI would be directly investing in US securities, including ADRs/GDRs issued by foreign companies. They, of course, claim that this will give exposure to Indian investors and provide us with an opportunity to gain from US markets growth as the market capitalisation of stocks listed in NYSE is 12 times more than those listed on BSE.

And this week, DSP has launched the DSP BlackRock US Flexible Equity fund and the NFO closes on 31-Jul. This fund is similar to FT fund discussed above, in the sense that, its a fund-of-funds whereby they would be investing in Blackrock Global funds.

Although these funds may provide investors an opportunity to diversify their portfolio, but the benefit to be drawn out of this is doubtful. In the long-run, as and when the Indian rupee recovers and goes back to levels of being less than 50 rupees conversion for each dollar, it will erase the gains. Also, I believe that growth is more sustainable in Indian markets than US markets. So, if we carefully choose a few midcap and smallcap funds, we will definitely get better returns than US centric funds.

Nevertheless, for the optimistic and enthusiastic investors who believe in American growth story, this may be a good opportunity to dive-in. And since the markets have been bearish for a while now, we maybe in for a good bull run and see good upside rallies in the future.